RBI should continue with rate pause, says CII chief
The Reserve Bank of India (RBI) should continue with a pause in the key repo rate and change its stance to neutral, Confederation of Indian Industry (CII) President R Dinesh said on Thursday.
This is warranted given the fast moderation in inflation falling to 5.3 per cent — within the RBI’S target range of 4-6 per cent — in FY24, Dinesh said in his first press conference as the CII chief.
His recommendations come a week before the RBI’S Monetary Policy Committee review meeting slated for June 6-8. Inflation in April had slipped to an 18-month low of 4.7 per cent, inching closer to the 4 per cent target.
Dinesh said CII expected GDP growth to be in the range of 6.5-6.7 per cent in 2023-24 with CPI inflation falling within the RBI’S target range. He noted that 72 per cent of over 630 CEOS participating in the CII’S annual survey believed inflation would fall below the 5 per
cent mark in FY24.
His statements came a day afterthegdpreleasethatshowed that the economy had outperformed, growing 6.1 per cent in the fourth quarter of FY23. The FY23 numbers were subsequently revised to 7.2 per cent.
In case of business-as-usual and oil at $85 per barrel, the growth is expected at 6.5 per cent. The upside to this forecast is 6.7 per cent if oil is at $70 per barrel, according to the CII.
Dinesh suggested setting up of a trade & investment promotion body with dedicated overseas offices to provide marketing services to Indian exporters which will help India achieve its target of $2 trillion in exports.
Fast-tracking free trade agreements (FTAS) with the UK, EU, Israel, GCC (Gulf Cooperation Council), and European Free Trade Association (EFTA), and undertaking policies for services export promotion will provide an impetus to growth of exports,” he said.
To facilitate ease of doing business, the CII chief recommended setting up of cabinet secretary-monitored centralised online grievance redressal mechanism and providing all approvals through a national single window system.
Emphasising on lower cost of funds to finance India’s growth, Dinesh said: “If you need to have 7.5 per cent growth, the government needs to work towards financing growth via long-term funds and finding innovative avenues for growth capital from banks.”